U.S. trade report flags issues from ‘Make in India’ policy
Context: An annual report submitted by the U.S. Trade Representative (USTR) to Congress, calls India’s policies “trade-restrictive” and says the “Make in India” campaign epitomises the challenges to the trade relationship.
- While India’s large market, economic growth, and progress towards development make it an essential market for many U.S. exporters, a general and consistent trend of trade-restrictive policies have inhibited the potential of the bilateral trade
- Recent Indian emphasis on import substitution through a “Make in India” campaign has epitomised the challenges facing the bilateral trade relationship.
- The Make in India campaign was launched by Prime Minister Modi in 2014 to incentivise production in India.
- The report describes the Trump administration’s revocation of India’s preferential trading status under the Generalised System of Preferences (GSP) program in June 2019 and the ensuing discussion to achieve a mini trade deal (“package”) throughout 2020.
- In a section on Digital Service Tax, a Section 301 investigation on India’s DST, which began in June last year, is highlighted. The investigation is ongoing, as per the report.
Make in India:
- Make in India is an initiative by the Government of India to encourage companies to manufacture in India and incentivize dedicated investments into manufacturing.
- The policy approach was to create a conducive environment for investments, develop a modern and efficient infrastructure, and open up new sectors for foreign capital.
- The initiative targeted 25 economic sectors for job creation and skill enhancement, and aimed "to transform India into a global design and manufacturing hub."
- "Make in India" had three stated objectives:
- to increase the manufacturing sector's growth rate to 12-14% per annum;
- to create 100 million additional manufacturing jobs in the economy by 2022;
- to ensure that the manufacturing sector's contribution to GDP is increased to 25% by 2022 (later revised to 2025).